Editor’s Note: Workspan Daily will be publishing a monthly sales compensation column from the Alexander Group for the benefit of our readers and to encourage further discourse on topics vital to compensation professionals. New to WorldatWork? Please feel free to join the discussion in our Online Community or send your thoughts to firstname.lastname@example.org.
Sales compensation professionals want to know: Is wage inflation coming to the sales force? (Yes.) Are companies offering COVID-19 pay protection in 2021? (Less so than in 2020.) Is seller non-compensated revenue increasing? (Yes.) How much do companies spend on contests and spiffs? (3% of W-2.)
The Alexander Group examined these and other questions in the “2021 Sales Compensation Hot Topics Survey” published in July. More than 120 sales departments provided their perspectives on 37 questions. The topics included 2021 midyear assessment of practices, wage inflation, COVID-19 implications, sales crediting and contests and spiffs.
At the start of the fiscal year, revenue leaders expected a revenue rebound in 2021. However, year-to-date performance has been stronger than initial projections, as 31.6% of the participants are exceeding their incentive budget by greater than 3%. Some companies are making midyear quota adjustments.
Wage inflation is becoming more apparent as most companies seek to match or exceed market rates — 44% are making some type of wage inflation adjustment.
Many companies offered some degree of pay protection in 2020 if earnings were significantly affected by COVID-19 restrictions. Fewer companies see the need for such protective practices in 2021. 22.4% are making adjustments in 2021, down from 60.6% in 2020.
The use of “other” non-compensable sales channels (e.g., e-commerce) is increasing. 65.5% have non-seller compensated revenue.
Most companies will spend less than 3% of W-2 total population earnings on contests and spiffs.
- 2021 midyear sales compensation payouts are trending higher than expected.
- Wage inflation is increasing.
- The need for COVID-19 pay protection in 2021 is still evident, but less so than 2020.
- Non-compensated revenue is increasing.
- Companies expect to spend 3% or less of W-2 earnings on contests and spiffs.
About the Author